Cancellations And Refunds Under California's Consumer Protection Statutes In An Evolving COVID-19 Landscape

• Published date: 01 July 2020
• Subject Matter: Consumer Protection, Litigation, Mediation & Arbitration, Coronavirus (COVID-19), Class Actions, Dodd-Frank, Consumer Protection Act, Contracts and Force Majeure
• Law Firm: Morrison & Foerster LLP
• Author: Ms Penelope Preovolos, Claudia M. Vetesi and Jamis Barcott

Several months into the widespread business closures and event cancellations resulting from the COVID 19 pandemic, we have seen businesses adopt a range of strategies to respond. Those strategies, in addition to the closures and cancellations themselves, have sparked a surge in class action litigation, much of it under California's consumer protection statutes, the Unfair Competition Law (UCL), Consumer Legal Remedies Act (CLRA), and False Advertising Law (FAL).

This blog post explores strategies (short of full refunds) that have been adopted by businesses to address cancellations and closures, as well as class actions that have been filed in response. We also examine potential defenses for this new breed of class action litigation.

COVID-19 Mitigation and Risk Reduction Strategies and Class Action Challenges

Transition to Online Services

The expansion of our online presence has become ubiquitous with our post-COVID-19 experience. Rather than simply closing up shop, many companies have transitioned their business models from in-person to online almost overnight. This transition, however, has not been without its own unique challenges, leading to numerous class action suits across the state. Notable examples include:

• Christina Diaz v University of Southern California (Central District of California, Judge Dolly Gee)

As universities have moved classes online, lawsuits have been filed seeking reimbursement for room and board and reimbursement for the lost benefits of an in-person education.¹ On May 4th, a putative class of students brought UCL claims against the University of Southern California for allegedly continuing to hold students liable for the full pre-shutdown tuition, despite not providing the services the students had bargained for.² In the wake of California Governor Gavin Newsom's stay-at-home order, USC had transitioned its entire university from its physical location in Downtown Los Angeles to the videoconference platform Zoom. Despite USC offering the same degrees and accreditation it had offered prior to COVID-19, the putative student class argues that the loss of physical facilities and amenities dilutes the value of their education.

• Erin Weiler v. CorePower Yoga, LLC (Central District of California, Judge George Wu)

Multiple cases throughout the state have also targeted gyms, which have struggled to adapt their business model to California's stay-at-home orders and social distancing guidelines. On April 15th, a putative class brought UCL, CLRA, and FAL claims against CorePower Yoga, a yoga studio in Los Angeles, for allegedly continuing to charge monthly membership fees despite closing down their studio indefinitely.³ In lieu of offering full refunds, CorePower Yoga offered its monthly members free access to a special collection of online classes that mimicked the classes offered at their physical studio. Despite the availability of these online classes, the putative class argues that this is not what they bargained for when they initially signed up for CorePower and that they can only be made whole by the receiving a full refund.

Credits for Future Events

Although we are unlikely to see live audiences at concerts, conventions, and sporting events anytime soon, many companies are looking to use the prospect of future events to their advantage. Crediting consumers for future events can...